How do the mood disorders of parents influence how they and their children process and react to the emotions of others? This is a study of perceptions of others' emotions by parents and children in normal and depressed families. Structured tests (photographs of infants and picture stories about distress) are used to assess mothers' perceptions of infants' emotions and children's interpretations of affect and social interactions of others. Preliminary analyses indicate differences in children with parents from different diagnostic categories. Children of manic-depressive parents are overly emotionally reactive to the distress states of others, with particular sensitivity to states of anger and aggression. Children with depressed mothers are less able to communicate about and interpret sadness.